The purpose of this study is to compare the efficacy of focal cognitive therapy (FCT) to standard cognitive therapy for anxiety (SCT) for the treatment of panic disorder. In addition, the effectiveness of both approaches in helping medicated patients to discontinue pharmacological treatment will be evaluated. The specific aims of the study are 1) to test the efficacy of cognitive therapy in reducing panic attacks in a medication-free sample and in a medication withdrawal sample, 2) to test the effectiveness of cognitive therapy in aiding withdrawal from antipanic medication, 3) to determine the incremental efficacy of focal cognitive therapy over standard cognitive therapy for panic disorder, 4) to determine the relationship of cognitive process variables and prediction variables to recovery, 5) to extent the comparisons of cognitive therapy to a variety of control conditions in a parallel study currently underway at Oxford University. Focal cognitive therapy focuses on the catastrophic interpretation of bodily sensations and specifically attempts to provoke panic attacks as a therapeutic tool. Standard cognitive therapy deals with life stresses and misinterpretations of interpersonal situations. Patients with a DSM-III-R diagnosis of Panic Disorder according to a structured interview will qualify for the study. The comparative efficacy of the two approaches will be examined by assigning qualified patients to four treatment groups: 1) Focal Cognitive Therapy in a mediation-free sample, 2) Focal Cognitive Therapy with medication withdrawal, 3) Standard Cognitive Therapy in a medication-free sample, and 4) Standard Cognitive Therapy with medication withdrawal. Group assignment will be carried out by stratification of the sample with respect to medication status (medication-free or medicated) at intake followed by random assignment to either FCT or SCT. Treatment will last 12 weeks, and patients will be followed for one year. Patients will be assessed through an extensive battery of selfand clinician-rated tests. FCT and SCT will be conducted according to written protocols and medication will be tapered by a consulting psychiatrist according to a predetermined schedule. Reevaluations will be conducted during treatment at 4, 8, and 12 weeks (end of treatment) and at 3 months, 6 months, and one year posttreatment. Treatment efficacy, process indicators, effectiveness of tapering of medication, and relapse rates will be analyzed by analyses of variance and multivariate procedures.